Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One stock to keep an eye on is Group 1 Automotive (GPI). GPI is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock is trading with P/E ratio of 7.89 right now. For comparison, its industry sports an average P/E of 9.48. Over the last 12 months, GPI's Forward P/E has been as high as 9.13 and as low as 5.56, with a median of 7.30.
Another valuation metric that we should highlight is GPI's P/B ratio of 1.30. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 1.47. GPI's P/B has been as high as 1.43 and as low as 0.82, with a median of 1.12, over the past year.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. GPI has a P/S ratio of 0.13. This compares to its industry's average P/S of 0.24.
Finally, we should also recognize that GPI has a P/CF ratio of 6.54. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 7.28. GPI's P/CF has been as high as 7.08 and as low as 3.11, with a median of 4.96, all within the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Group 1 Automotive is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, GPI feels like a great value stock at the moment.
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Group 1 Automotive, Inc. (GPI) : Free Stock Analysis Report
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